*John Schmitt is a Senior Economist and Janelle Jones is a Research Assistant at the Center for Economicand Policy Research, in Washington, D.C.
Low-wage Workers Are Olderand Better Educated than Ever
Relative to any of the most common benchmarks
the cost of living, the wages of the average worker, or average productivity levels
the currentfederal minimum wage of $7.25 per hour is well below its historical value.
These usual reference points, however, understate the true erosionin the minimum wage in recent decades because the average low-wage worker today is both older and much better educated than the averagelow-wage worker was in the past. All else equal, older and better-educated workers earn more than youngerand less-educated workers. More education
a completed high school
degree, an associate’s degree from a two
year college, a bachelor’s degree
from a four-year college, or an advanced degree
all add to a worker’s
skills. An extra year of work also increases skills through a combinationof on-the-job training and accumulated work experience. The labormarket consistently rewards these education- and experience-related skills with higher pay, but the federal minimum wage has not recognized theseimprovements in the skill level of low-wage workers.Even if there had been no change in the cost of living over the last 30years, we would have expected the earnings of low-wage workers to risesimply because low-wage workers today, on average, are older and muchbetter educated than they were in 1979, when wage inequality began torise sharply in the United States.
below summarizes the characteristics of low-wage workers by age and education, where low wages are defined as earning $10.00 perhour or less in 2011 dollars. Between 1979 and 2011, the average age of low-wage workers increased 2.6 years, from 32.3 to 34.9. The rise in theaverage age reflects a big drop in the share of low-wage workers who areteenagers
from over one-in-four (26.0 percent) in 1979 to less than one-in-eight (12.0 percent) in 2011. Over the same period, the representationof workers in the 25-to-34 and 35-to-64 age ranges both increasedsharply. In 1979, workers 25-to-64 made up almost half (about 48percent) of low-wage workers; by 2011, they were just over 60 percent.(See
.)Meanwhile, the educational attainment of low-wage workers has alsosoared. The share of low-wage workers with less than a high school
Center for Economic andPolicy Research
1611 Connecticut Ave, NWSuite 400Washington, DC 20009tel: 202-293-5380fax: 202-588-1356www.cepr.net